Recommended Reading: The Weakest Boom Ever

A lot of my work assumes that readers are already grounded in what makes the boom/bust economy go… and stop. In other words, if I’m talking bullish it means I’m playing it straight and simply using the TA and/or the macro funda – as they appear – rather than operating per my bedrock philosophy (and bias) in managing the markets.

As to said bedrock philosophy, here is Steve Saville clearly illustrating boom/bust cycles and the reasons they exist. The economic and especially market cycles since the late 90s have not been normal to history, after all. They have been much more violent and for that we thank our fine feathered friends (pretending to be hawks and doves) at the Fed.

As a side note, for various reasons I’ve been anticipating coming events to look more like 2000-2002 than 2007-2009. Saville adds another, with respect to the huge post-2008 monetary inflation having disproportionately benefited the financial as opposed to the real economy…

“If the boom were to end within the coming 12 months, which it will if monetary conditions continue to tighten, then the ensuing recession may be far more severe in the financial markets (where the monetary inflation had its greatest impact) than in the real economy. In other words, the bust may look more like 2000-2002, when a short and mild economic recession was accompanied by a 50% decline in the stock market, than 2007-2009, when a devastating economic recession was accompanied by a similar decline in the stock market.”

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